Mortgage and Real Estate Terms – H

HOME EQUITY – the part of your home that you own outright; right now. That is, the difference between its appraised value and the balance of your mortgage. Using that “equity” for a loan has been commonly called a “second mortgage” for years; today’s term more accurately – a home equity loan.

HOME IMPROVEMENT LOAN – a mortgage to finance an addition to or rehabilitation of a residence.

HOME MORTGAGE DISCLOSURE ACT (HMDA) – Federal legislation which requires certain types of lenders to compile and disclose data on where their mortgage and home improvement loans are being made.

HOMEOWNERS ASSOCIATION (HOA) – a nonprofit organization that manages the common areas and services of a planned unit development (PUD) or condominium project. In a condominium project, it has no ownership interest in the common areas; in a planned unit development it holds title to common areas.

HOMEOWNER’S POLICY – a multiple peril insurance policy available to owners of private dwellings, which covers the dwelling and its contents as well as personal liability.

HOMEOWNERS WARRANTY PROGRAM (HOW) – an insurance program through which participating builders provide home buyers with a warranty on the workmanship and materials of a home and warrant against major structural defects.

HOMESTEAD ESTATE – in some states, a statutory exemption which prohibits the attachment or sale of owner-occupied properties, to pay the claims of creditors.

HOUSING EXPENSE RATIO – the relationship of a borrower’s monthly payment obligation on housing (principal, interest, taxes, insurance and other applicable housing expenses) divided by gross monthly income, expressed as a percentage – also called the top ratio or front end ratio.

HUD-1 UNIFORM SETTLEMENT STATEMENT – the standard form used to disclose costs of closing. All charges imposed in the transaction must be disclosed separately, and in detail.